Ratings agency Fitch has today upgraded ArcelorMittal's long-term issuer default rating and senior unsecured rating on the back of its strengthening balance sheet, debt reduction and cost-cutting.
The recovery in the global steel markets, driven by Chinese supply-side reform, has supported the company's operating performance. And Fitch said the steel outlook remains positive, supported by capacity closures and extended restrictions in China. ArcelorMittal's shipments should come in at 87mn t this year, it said.
Protectionist policies in Europe and the US could provide some support for domestic steel prices in the regions, although moderating raw material costs could lead to some downside, Fitch said.
The acquisition of Ilva would "provide additional strength" to the company's European franchise despite antitrust concerns, meaning it will have to hive off some plants, Fitch said. "In the first two years post acquisition, Ilva would slightly reduce operating margins of ArcelorMittal in Europe, but from year three we expect a positive earnings contribution," it said.
